from http://blogs.alternet.org/speakeasy/2010/01/27/geithners-shady-role-in-the-aig-bailout/
In a heated exchange before the House Oversight Committee on Jan. 27, Treasury Secretary Timothy Geithner insisted that he "withdrew" from the AIG bailout talks before they ran into legally questionable territory, but acknowledged that he could not document his recusal.
Geithner has been under heavy fire for months over his role in the AIG bailout, particularly with regard to negotiations that allowed taxpayer funds to be funneled directly to the insurance giant's counterparties—megabanks like Goldman Sachs, Bank of America and Citigroup—with no strings attached. At the urging of the Federal Reserve, both the names of these banks and the amounts that they scored were withheld from the public for months. The New York office of the Fed, which Geithner headed, even urged AIG to block that information from the Securities and Exchange Commission, a potentially criminal offense.
Geithner and the White House have consistently argued that he "recused" himself from the AIG talks before any of these legally explosive decisions were made, and Geithner reiterated that argument today:
On November 24th, after President Obama announced his intention to nominate me for Secretary of the Treasury, and after broad consultation with the Chairman of the Federal Reserve and others . . . I withdrew from monetary policy decisions, policies involving individual financial institutions and day-to-day management of the New York Fed. I had no role, before or after Nov. 24, in making decisions about what to disclose about the specific financial terms of . . . payments to AIG counterparties.
The dates on the disclosure talks match up very neatly for Geithner. According to testimony from the New York Fed's top lawyer, Thomas Baxter Jr., on the exact same day that Geithner formally withdrew from the AIG talks– Nov. 24, 2008– AIG began consulting the New York Fed about what aspects of the bailout should be disclosed.
But when pressed about his recusal by Rep. Marcy Kaptur, D-Ohio, Geithner acknowledged that he did not sign any paperwork explaining the terms of his "withdrawal" from the AIG talks.
"I did not sign a recusal agreement," Geithner said. "I withdrew from day-to-day management operations, policy issues at the New York Fed, and my colleagues, both in Washington and in New York can attest to that."
"So there was no formal agreement?" Kaptur asked.
Geithner responded: "No, as I said in my testimony, what I did is, I withdrew from– and this was very important to do—again, no precedent for this, a sitting New York Fed President being nominated for Secretary of the Treasury. And I withdrew from, after carefully consulting my colleagues, from monetary policy decisions, I did not go to the FOMC meeting in December, and I withdrew from all the decisions about these individual cases involving the financial system. And that was the right thing to do at that time."
This is an absolutely astonishing claim. Geithner was officially stepping aside as President and CEO of the New York Federal Reserve, one of the most powerful and important economic policy positions in the world—and he didn't sign a contract. There was no document explaining what his new role would be, who would be filling his shoes, and what would be expected of them both. It's unthinkable for the any major U.S. government official or the head of a private corporation to make such an exit without first signing a document reviewed by a team of lawyers.
Geithner's explanation for his role in the AIG bailout strains credulity, but so far, there is no concrete evidence to contradict him. At the very least, however, we know that both Geithner and Federal Reserve Chairman Ben Bernanke were extraordinarily cavalier about documenting their actions and responsibilities during the financial crisis. If Geithner does not want to document his public duties, maybe he shouldn't have any.
rest at http://blogs.alternet.org/speakeasy/2010/01/27/geithners-shady-role-in-the-aig-bailout/
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